Global Cruise Industry

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1 Dr Grant Kleeman Macquarie University, Sydney The cruise industry is one of the fastest growing sectors of the global tourism industry. In 2013 the industry generated revenues of $36.2 billion and the growing fleet of cruise ships carried 20.9 million passengers. The world s fleet of 283 ships had a total capacity of 438,595 in Industry growth rate The cruise industry currently has experienced an average annual growth rate of 7 per cent since This growth, at least in part, has been driven by the adding of the baby boomer generation. As people age, cruising becomes one of the few holidays available to those with mobility ailments. Rising disposable incomes has also increased demand for cruise-based vacations. Figure 1: Growth of the global cruise industry (actual), * Cunard s Queen Elizabeth 2, Sydney Harbour Source: J. Sillar Industry s relative size While the size of the global cruise markets doubles about every 10 years (an annual growth rate of about 7%) it remains relatively small player in the global tourism industry that now accounts for more than a billion international movements a year. A simple comparison puts the size of the industry into perspective in 2012 more than million people visited Las Vegas while the global cruise industry carried about 18 million passengers. There is little research on the market potential of the cruise industry or when the saturation point could be reached. The industry remains fundamentally limited by the supply of ships and the appeal of its itineraries. Of particular interest is the potential of the Asian market. Some industry experts argue that the growth of the aspirational Chinese middle class will underpin future growth in the industry. *Number of passengers carried (millions) Recessions Source: The Geography of Transport Systems [ edu/geotrans/eng/ch7en/appl7en/global_cruise_passengers.html] million million million million million Origin of passengers Americans account for more than 50% of cruise passengers followed by those from the United Kingdom and Island and Germany (see Table 1). The fastest growing markets among the top 10 are Scandinavia and Finland, and Australia. The 130.3% increase in Australia s cruising accounts for the increasing number of cruise ships visiting Australian ports. It also accounts for the basing of ships in Australia. China is also a rapidly growing source of passengers, albeit from a low base. 28 Geography Bulletin Vol 46, No

2 Table 1: Top 10 source countries, cruise passengers, 2013 Country Passengers* Global passenger share Five year percentage change Passenger source rank USA 11, % 15.1% 1 UK & Ireland 1, % 16.4% 2 Germany 1, % 80.5% 3 Italy % 26.1% 4 Australia % 130.3% 5 Canada % 1.3% 6 Brazil % 84.8% 7 Spain % 20.7% 8 France % 67.7% 9 Scandinavia & Finland % 184.6% 10 * 2013 passenger estimates (000 s) Source: Cruise World Industry Review, 2014 Vol. 1 Figure 2: Worldwide cruise revenues by source Celebrity Solstice docked at Circular Quay Sydney, Source: O. Sillar Concentration of ownership in the global cruise industry Two American-based corporations dominate the global cruise industry the Carnival Corporation and Royal Caribbean International. Headquartered in Miami, Florida, U.S.A., and London, England, Carnival Corporation operate a fleet of 100 ships, with another seven ships scheduled for delivery between before March With approximately 200,000 guests and 77,000 shipboard employees, there are more than 277,000 people sailing aboard the Carnival fleet at any given time. Carnival s cruise brands includes Carnival Cruise Lines, Holland America Line, Princess Cruises and Seabourn in North America; P&O Cruises (UK), and Cunard in the United Kingdom; AIDA Cruises in Germany; Costa Cruises in Southern Europe; Iberocruceros in Spain; and P&O Cruises (Australia) in Australia. Royal Caribbean International, founded in Norway in 1969, is based in Miami Florida, USA. The company operates a fleet of 40 ships, with another four scheduled for delivery by The company s ships can accommodate 97,600 guests. The brands controlled by the Royal Caribbean include Celebrity Cruises, Azamara Cruises, Pullmantur Cruises and CDF Croisieres de France. See Table 2. Table 2: Major cruise lines, 2013 Parent company Brand* Passenger Capacity Number of ships Share of passengers (%) Carnival Corporation Carnival 62, Princess 37, Costa Cruises 31, Holland America 23, AIDA 18, P&O Cruises 14, P&O Cruises Aust 6, Cunard 6, Ibero Cruises 4, Seabourn 1, Total 208, Royal Caribbean International Royal Caribbean 62, Celebrity 24, Pullmantur 7, CDF 1, Azamara 1, Total 97, Geography Bulletin Vol 46, No

3 Others (Selected) MSC Cruises 31, Norwegian 30, Disney 8, Thomson Cruises 7, Star Cruises 7, Hurtigruten 5, Louis Cruises 4, Oceania Cruises 4, Fred Olsen 3, TUI Cruises 3, Phoenix Reisen 2, Silversea 2, Regent Seven Seas 1, Crystal 2, Classic International 2, Cruises Saga Cruises & Spirit 1, of Adventure All Leisure Holidays 1, Cruise & Maritime 1, Voyages Discovery World 1, Cruises Hapag-Lloyd 1, Ocean Star Cruises 1, Ponant Yacht Cruises 1, * Lines with more than 1 ship and a passenger capacity of greater than 1000 Figure 2: MS Allure of the Seas also add an additional $3.2 billion in annual revenue of the cruise industry. Fleet refurbishment To remain competitive cruise companies must refurbish their vessels on a regular basis. These makeovers can make an old ship look new and enables operators to avoid having to invest the hundreds of millions of dollars needed for a new-build. An industry trend is the abandonment of Old Vegas style of decoration to a much cleaner and simpler look. Industry segmentation As with hotels, cruise ships have a star-rating system. Cruise ship operators differentiate the product to appeal to specific segments of the cruise market. Figure 3 shows the relative size of each segment. Figure 3: Passenger capacity by star rating segment Source: Cruise Market Watch ( travel-agent-trends/) Allure of the Seas, together with her sister ship Oasis of the Seas, are the largest passenger ships ever constructed. Gross tonnage: 225,282 GT; Length: m.; 16 passenger decks; 5,400 passengers; and 2,384 crew. The ship cost US$1.6 billion to build. Projected growth in capacity A total of six new ships were added to the world s fleet of cruise ships in 3013, with a total capacity of 14,074 passengers. From 2014 to 2015, a net of 13 more ships will come into service, adding 39,297 berths (an average 8.7 per cent increase in passenger capacity). They will Principal destinations Figure 4 shows port visitations in The principal concentrations of cruise ship activity are the Caribbean Sea, the Mediterranean Sean, the inland passage of western Canada/Alaska and the waters of Scandinavia. These are principally northern hemisphere summer destinations. In the northern winter a significant number of ships are assigned to the Southern Hemisphere or undertake world cruised. The leading cruise destination in terms of ship deployments remains the Caribbean, accounting for 37.3% of all global itineraries followed by the Mediterranean (18.9%), Northern Europe (11.1%), Australia/New Zealand (5.9%), Alaska (4.5%), Asia (4.4%) and South America 3.3%. In 2014, markets experiencing increased ship deployments include the Caribbean (+12%), Northern Europe (+5.2%), Asia (+31.6%) and Australasia at +22%. 30 Geography Bulletin Vol 46, No

4 Figure 4: Principal ports of call by number of passengers, 2013 Who s cruising? While cruising attracts a broad demographic there are some distinct differences within various segments. As a general rule the shorter the cruise the younger the clientele. Cruises of longer duration appeal to an older (often retired) demographic, those with the time available to have a lengthy vacation. Shorter cruises are popular with families and younger age groups who take annual leave or are restricted by the availability of school holidays. Some cruise lines (star rating categories) are more popular with particular age or socio-economic groups. The Cunard ships (Queen Mary 2, Queen Victoria and Queen Elisabeth 2) are popular with older passengers while the contemporary ships are popular with families and groups. Premium cruise lines such as Regent Seven Seas, Silversea and Seabourn offer a more exclusive experience for the well-heeled on smaller ships. Shopping precinct on board the MS Silja Symphony. Source: Wikimedia Commons Table 3: Demographic profile of cruise passengers Demographic Characteristic Category Percentage Age Educational attainment Graduate & Post-graduate 75 Employment Status Full-time 63 Retired 20 Gender Male 51 Income US$ $39k to $50k 9 $50k to $60k 10 $60k to $75k 16 $75k to $100k 19 $100k to $200k 39 $200k to $300k 7 $300k 1 Marital status Married 78 Source: Celebrity Solstice pool deck. Source: O. Sillar Geography Bulletin Vol 46, No

5 Major consumer motivators The decision on which cruise to select is influenced by a range of factors. These include: Price Destinations and itineraries offered Cruise board reputation Ease and comfort of travel Exciting new ships Convenient home ports Outstanding lifestyle amenities Top cruise trends Improved technology and connectivity at sea # Millennials* will drive first-time cruiser growth Luxury resurgence More all-inclusive packages Multi-generational travel will increase as will celebration travel & social/affinity groups Active vacations at sea high-energy onboard facilities Exotic locations driving new itinerary competition and cruise ship deployment Hot destinations Trans Pacific, World Cruises, U.S. Rivers, South America, Antarctic, Middle East, Canada/New England, Africa and Exotic Rivers # Keeping connected through social media is now part of our daily life. Royal Caribbean have responded by installing bow-stern Wi-Fi on all its vessels, which gives guests the freedom to access the internet around the ship. The line is also increasing its bandwidth seven-fold, providing a faster connection, and making it practical for guests to be online throughout their journey. Other cruise lines will follow. * Birth years ranging from the early 1980s to the early 2000s. Sometimes referred to as Generation Y. AGTA CONFERENCE January 2015 New Zealand and the Australian Curriculum: Geography A number of resources have been written to provide a fresh perspective on different aspects of New Zealand s geography. Each resource includes links to the Australian Curriculum: Geography indicating the relevance of New Zealand s geography for Australian geography educators. A millennium ago, Pure Canterbury, Far North District and A notional transect across the Volcanic Plateau. Additional resources will be added during Conference Speakers Leading geography educators have agreed to present the keynote presentations, including Professor John Morgan and Associate Professor Alaric Maude. Pre-conference tours Tour 1: Northland Tuesday 6 to Sunday 11 January 2015 Tour 2: Central North Island, Middle Earth & Blue Duck Station Tuesday 6 to Sunday 11 January 2015 Conference program Venue: Distinction Hotel, Rotorua, North Island, NZ Sunday 11 January: Registration and welcome function Monday 12 January: Welcome, keynote presentations, workshops and evening social event Tuesday 13 January: Fieldtrips Wednesday 14 January: Fieldtrips and conference dinner Thursday 15 January: Keynote presentations and workshops Friday 16 January: Checkout and return home or join post-conference tour to South Island NZ. Fieldtrips Fieldtrips on Tuesday and Wednesday: Tour 1: White Island includes lunch ($75.00 Tour surcharge) Tour 2: Hells Gate Geothermal Process & Mokoia Island Urban/ Environmental & Rotorua (includes lunch) Tour 3: Scion Forests- products Innovation & Farm Tour focus on sustainability (includes lunch) Tour 4: Waimangu Volcanic Valley, GNS Volcanic Activity Centre, Huka Falls, Wairakei Geothermal Power & Lake Taupo (includes lunch) A special program has been arranged for partners of delegates attending the conference. Registration available at conf2015/index.php 32 Geography Bulletin Vol 46, No

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